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Bank Lending Expands Further in June


Bank lending, net of banks’ reverse repurchase (RRP) placements with the BSP, grew at a faster pace of 9.6 percent in June from the growth of 8.1 percent a month earlier. Outstanding loans of commercial banks including RRPs also continued to grow, albeit at a slower pace of 5.5 percent relative to the month-ago expansion of 7.7 percent, to reach P2.4 trillion. On a month-on-month, seasonally-adjusted basis, commercial banks’ lending in June grew by 1.1 percent for loans net of RRPs but declined slightly by 0.8 percent for loans inclusive of RRPs.

The growth of loans for production activities—which comprise around four-fifths of commercial banks’ total loan portfolio—accelerated to 9.3 percent in June from 7.9 percent a month earlier.  Similarly, loans for household consumption (credit card, auto loans and others) expanded at a faster pace of 13.0 percent from 10.3 percent in May.

The growth of production loans was traced to increased lending to agriculture, hunting and forestry as well as to real estate, renting and business services (both of which grew by 13.4 percent). Lending to the electricity, gas and water sector picked up considerably, expanding by 23.7 percent year-on-year. Lending to manufacturing grew at faster rate of 5.6 percent in June compared to the 2.2 percent expansion in the previous month while growth in lending to construction activities remained double digit at 18.7 percent from 27.5 percent a month earlier. Contractions in bank lending were seen in only two sectors: fishing (-30.5 percent) and other community, social and personal services (-22.3 percent).
The sustained expansion of bank lending reflects the strengthening of domestic economic activity. Going forward, the BSP will continue to ensure that the credit and liquidity environment is supportive of self-sustaining and broad-based economic growth while promoting low and stable inflation.

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